New Data Security Regulations to become effective March 1, 2010

For further information on this issue, please see the following links directly to the Mass.gov materail prepared to help you create office policy and comply with the regs:
Frequently Asked Questions:
Sample Small Business Policy:
Compliance Checklist:
Requirements for Security Breach Notification:
Data Security Regulations:

Massachusetts has joined the majority of states in enacting a comprehensive data security law which governs theway personal information must be protected. After several delays the Massachusetts Office of Consumer Affairs has issued the final regulations to address the issue which become effective on March 1, 2010. Unlike previous draft versions of the regulations, the final regulations use a risk-based approach that directs businesses to establish a written comprehensive information security program (“WISP”) based on their size, scope and available resources. The final version of the regulations were changed as a result of input from MAR and other groups. The changes were primarily intended to ease the burden on small businesses that may not handle a considerable amount of personal information or may not have the resources readily available to develop a sophisticated security program.

Do the new regulations apply to real estate brokers and salespersons?
yes. The regulations apply to any person or business that collects, owns or licenses personal information about a resident of the Commonwealth, including employees. Personal information includes a person’s first and last name in conjunction with their: social security number; driver’s license number or state issued ID card number; financial account number including credit or debit card numbers. Personal information does not include information that is lawfully obtained from publically available information. State Legal Counsel, Steve Ryan has confirmed that redacting (blacking out) check account and routing numbers remove it from the file. Consider information on hud statements and the type of mortgage / personal material retained in your files.

It is important to recognize that in many real estate transactions no personal information may be collected by the broker. Instances where brokers are more likely to collect personal information include rental transactions and short sales. For example, a rental application will typically require a prospective tenant’s name and social security number. When the broker takes this application, this means that the broker has now generally collected personal information and needs to ensure that the information is protected in accordance with the regulations. By keeping the application in a locked file cabinet with limited access or shredding it after use, the broker has taken one step to comply with the regulations. It is advised that all brokers review what information is taken from customers and clients, regardless of the type of transaction. Knowing in advance what information you collect will help you develop your WISP and remain in compliance. It is also important to review all forms and information that is collected from consumers to ensure that no unnecessary personal information is being collected. Although the regulations do not specifically address the issue, keep in mind that past transactions with closed files that may remain in the office may contain personal information. Unlike many other laws applicable to brokers and salespersons, the regulations were not written specifically for the real estate industry. Rather, they apply broadly to all industries in Massachusetts that may collect, own or license personal information of residents of the state. We continue to monitor similar legislation on the issue of data security and ID theft have been proposed in Congress but have not been passed into law.

What do I have to do to comply?
The new statute and regulations require persons or businesses with personal information to develop a WISP. The scope and complexity of the document will vary depending on the type of personal information you will keep and the resources you have available. The WISP must identify the measures that will be taken to safeguard both electronic and hardcopy files. For example, the regulations state that the WISP must specify “reasonable restrictions upon physical access to records containing personal information and storage of such records and data in locked facilities, storage areas or containers.” The Regulations identify a number of other specific requirements that must be incorporated into the WISP. See the links below for a sample WISP that is posted on the State’s Office of Consumer Affairs website.

The WISP must also include measures to ensure protection of data maintained on a computer, laptops and portable devices. The regulations require encryption of these devises in cases where encryption is “technically feasible.” This means that if there is a reasonable means through technology to encrypt, then those steps should be taken to protect the data. The law recognizes that not all portable devices such as phones, blackberries, net books, iphones, etc. are technically capable of being encrypted. While it may not be technically possible to encrypt these devices, personal information should not be put at an unreasonable risk.

Must my information security program be in writing?
Yes, your information security program must be in writing. The scope and complexity of the document will vary depending on your resources and the type of personal information you are storing or maintaining. But everyone who owns or licenses personal information must have a written plan detailing the measures adopted to safeguard such information. A model policy, ready for easy customization, can be downloaded by clicking the link below.

Does my office have to meet the same requirements imposed on large investment banks and other major corporations?
No. The Commonwealth’s Office of Consumer Affairs adopted a “risk-based” approach that directs a business to establish a written security program that takes into account the particular business's size, scope of business, amount of resources, nature and quantity of data collected or stored, and the need for security. This approach is especially important to those small businesses that do not handle or store large amounts of personal information.

What exactly is “encryption”?
Encryption entails the transformation of data into a form in which meaning cannot be assigned without the use of a confidential process or key.

Do I have to hire an expert to encrypt my electronic devices or to write a security program?
Unlike earlier versions, the final Regulations have very significant differences that take into account small businesses with limited resources. Most importantly the use of a risk-based approach allows businesses to comply by taking into account the size, scope, and available resources, nature and quantity of data collected or stored and the need for security. A sample policy is available at the link below but should be tailored to meet the specific needs of each individual brokerage. If personal information is stored on a computer system, it must be encrypted if technically feasible.

For further information on this issue, please see the following links:
Data Security Regulations:
Frequently Asked Questions:
Sample Small Business Policy:
Compliance Checklist:
Requirements for Security Breach Notification:

President Anne Meczywor is seeking volunteers interested in serving on a new task force to take a look at the NAR Schools of the Future program.  Past educators, Realtors involved in green building / smart growth or anyone who has contacts with schools or an interest in developing a program to work with middle school aged students are encouraged to volunteer.  The School of the Future is a design competition to give middle school students the opportunity to re-design their school spaces to enhance learning, save energy, preserve resources, and make connections to the surrounding community. Well-planned schools are critical to the growth of healthy communities and the development of engaged citizens.  interested?  Please contact Anne about this opportunity.

A partnership of local Realtor Assocation across Massachusetts joined together in late 2009 to apply to the National Assocation for assistance in training members on Foreclosure Prevention and Short Sale Processing. A 7-series set of videos was created specifcally for you, and a live training program will be scheduled in 2010 free of charge to all Realtors of the Berkshrie County Board. Check the calendar for details on the live session, and visit our Online Education Center to view the videos at no cost.

NAR's Green Designation is a real estate designation designed for residential, commercial and property management professionals looking to green their businesses and their lives. It is also the only green designation for agents AND property managers recognized by the National Association of REALTORS®.When you earn NAR's Green Designation, you'll gain:

• A comprehensive understanding of what it means to go green and the concerns of consumers seeking green knowledge about real estate
• Valuable real estate education that broadens your abilities in the eyes your clients, prospective clients and associates
• Enhanced ability to participate in the green real estate market
• Ongoing specialized training and resources that help you stay on top of green real estate issues and trends
• Access to customizable members-only marketing tools to help you build your business and gain a competitive edge

What we're offering?

This is the required core course needed to obtain Green Designation. It is completiely priced at $295 for the full two day program. Course Outline

To earn NAR's Green Designation, you must achieve the following:

• Successfully complete this 2-day Green Desigantion Core Course
• Within one year, successfully complete the Online Green Designation Elective Course, in either Residential Real Estate, Commercial Real Estate, or Property Management, and pass the written examination. (cost $125 for online elective course)
• Submit the Green Designation Application Form upon successful completion of the Core Course and at least one Elective Course.
• Maintain active membership in the National Association of REALTORS®.

Maintaining this Desgination beyond the first 12 months:

Annual membership dues for the Green REsource Council are $99.00 ($US), billed in advanced on a calendar-year basis. There is no cost for your initial membership dues with the application. Your completion of NAR’s Green Designation Core Course covers the first twelve months of membership. Your dues for the next calendar year will be due one year from you Core Course completion date and will be prorated to reflect the number of months remaining after the first 12-month period. You must maintain active membership in the NATIONAL ASSOCIATION OF REALTORS® and the Green REsource Council to retain and use NAR’s Green Designation.

Obtain Appraiser CE credits with instructor Tony Federico as he presents the 2010 USPAP Update program here in the Berkshires!  Seating is limited, please register early!

2010-2011 7 Hour USPAP Update

Credit info: This course has been approved by MA and VT and submitted to CT, NH, RI  for 7 hours of continuing education credit.

This presentation consists of material necessary for updating participant's knowledge of the 2010-2011 Uniform Standards of Professional Appraisal Practice (USPAP), as required for meeting continuing education requirements for general and residential appraisers. The update covers all of the applicable standards using a combination of lectures and case studies.

Sandy (or Sue) will be on hand to provide you with updates coming from the Board Office, emerging trends and topics.  Previous SOS meetings held this year have received great feedback as being very useful tools keeping the members abreast of changes taking place ~ helping them to work smarter.  You'll be sure to hear about Flex updates, Data Security mandates and much, much more.

Seating is limited.  Please reserve your space today!

The ever popular Steve Ryan, General Counsel of the Massachusetts Association of REALTORS, will be on hand to present information on emerging topics, legal hotline updates and legal updates.  Enjoy a buffet luncheon while arming yourself with the information and tools necessary to conduct your business both ethically and legally.

Thanks to Uncle Sam and some temporary tax credits, it pays right now to go green. Although a lot of attention has been paid to the $8,000 home buyer tax credit that was established earlier this year by the American Recovery and Reinvestment Act of 2009, that legislation also included a number of tax breaks for homeowners who want to improve their home’s energy efficiency.  

The Residential Energy Property Credit increases the energy tax credit for homeowners who make certain energy-efficient improvements to their existing homes, in many cases giving the homeowner a credit of up to 30 percent of the cost of the project. Most of the improvements must be made from January 1, 2009 through December 31, 2010, but some projects will be eligible for a tax credit through 2016.  These additional tax breaks reinforce the value of going green, can increase a home’s value to potential buyers and will serve to help the environment in the long run.  

Realtors understand the long-term investment and savings associated with greener homes.  As green building issues become more important to buyers, sellers and businesses, more and more Realtors are adding value to the real estate transaction by developing green business practices and educating themselves and their clients about the benefits of energy-efficient home and building features.  

Most energy-efficient improvements to existing homes now qualify for a tax credit of 30 percent of the project cost, up to $1,500. Exterior windows, skylights and doors with a qualifying U-Factor (which measures how well it insulates) and Solar Heat Gain Coefficient (which measures how well it blocks heat caused by sunlight) are eligible, as are certain metal and asphalt roofs. In addition, the credit covers installation costs for HVAC, gas, oil and propane water heaters and biomass stoves. The deal gets even sweeter for owners who enhance their home with geothermal heat pumps, solar energy systems or small wind energy systems. They qualify for 30 percent of the entire cost – including installation – and the credit doesn’t expire until December 31, 2016.  

There are no upper or lower income limits on energy efficient tax credits. For detailed information about all eligible projects, visit http://energystar.gov/taxcredits.  Please also remember when doing home improvement projects to save your receipts and the ‘Manufacturer's Certification Statement’ for your records in order to qualify for tax incentives.  Now is the ideal time for homeowners looking into “greening” their home. 

This isn’t just a fad. Energy efficiency and the cost savings that come along with it will never go out of style.

Two special provisions in the present tax credit law assist members of the military, intelligence and foreign services in taking advantage of the homebuyer tax credit, said McMillan.

Armed services members, as well as intelligence service and foreign service personnel, who are on active duty and out of the U.S. for 90 days during any part of 2009, get an additional year to buy their homes, to May 1, 2011.

Another benefit is a waiver on the time of occupancy of the home purchased with the tax credit. Homebuyers who purchase their home using the tax credit must use that home as a principal residence for a period of no fewer than three years, or must forfeit the entire credit. Military, intelligence and foreign service members do not have to repay the credit if they have to sell their home after fewer than three years occupancy due to official business.

Realtor Membership Renewal

Ah yes, it's that time again... annual renewal of your REALTOR® membership. While local and national dues have stayed the same, Massachusetts dues have increased by $9 for 2010. The breakdown is as follows:

Questions on the Home Valuation Code of Conduct (HVCC)
From Sandy Carroll, Chief Executive Officer

Q. Am I allowed to talk to the Appraiser during the appraisal process?

A. Yes, Realtors can talk to an appraiser, but you cannot try to influence appraisal value EXCEPT that you can provide factual data that the Appraiser can then chose to consider (or not). A perfect example is a Realtor offering relevant comps that the appraiser may not have known about. It just has to be factual information that the appraiser can legitimately cite and use as a basis for valuation. You can also point out inaccurate information or discuss errors or missing information. Telling the appraiser how much a home needs to appraise at, in order to close is a perfect example of what is prohibited.

Q. Don't appraisers need to be members of the Berkshire MLS in order to do appraisals in Berkshire County?

A. Well, it sure would be nice, but appraisers are not mandated to use MLS data in the creation of legitimate appraisals. It is conceivable that out-of-town appraisers can generate perfectly sound appraisals of value in Berkshire County, provided they research the market and became familiar with the area and it's property. Comparable sale information can be obtained from town offices, or from the Warren Group and listing agents can sometimes be the source for active information.

That said, the Massachusetts Board of Real Estate Appraisers (MBREA) was thrilled to learn about a new Berkshire MLS policy adopted a few months ago, that offers a limited, week-long access to the MLS to ourside appraisers for the purpose of helping get the best information possible in the hands of any appraiser working in our area, without requiring full membership. Please note, full members / local appraisers who are members here receive MLS access at a significantly lower rate than the one-week rate.

Q. I had a bank call and tell me that none of their “approved” appraisers could make it out to a house for at least two weeks and we are supposed to close in less then three weeks. I suggested a number of appraisers that we have worked with in the past, but the mortgage lender refused to go off of their in house list. Does this break this new rule?"

A. Technically, the bank stopped you from breaking the rules. Neither Realtors nor Banks can recommend or influence the selection of an appraiser. If the bank took a Realtors suggestions and tried to hire an alternate appraiser not on the"list" then both would have been in violation. Hence, this rule is causing delays and problems in the field, and the reason why NAR is working so hard to halt this regulation until it's impact can be adequately examined.

Questions on the revised TILA Disclosure Requirements effective July 30, 2009
From Steve Ryan, MAR General Counsel and Michael McDonagh, MAR Associate Counsel 

Q. What do I need to know about the Truth In Lending Act (TILA) and what should I be telling my clients?

A. You are correct regarding changes to TILA and Regulation Z. While these new rules only change responsibilities for lenders and not for Realtors®, it is important to understand what these changes are and how they may affect the time frames for lenders to process loans. The National Association of REALTORS® has released the following information on these new rules:

Lenders will be subject to new disclosure requirements for mortgage loans under the Federal Reserve Board Truth in Lending Regulation (Reg Z).  The new requirements apply to loan applications filed on or after July 30, 2009 (about two months earlier than originally planned).   The new rules are complex and compliance will be a challenge for lenders.  

REALTORS® will want to learn the basics so they can advise clients of potential delays and the new procedures. Here are key highlights of the changes:

• The new requirements apply to all mortgages secured by a borrower’s home, including primary and second homes and refinancing.  Investor loans continue to be exempt.

• Lenders must give good faith estimates of mortgage loan costs within 3 business days after the consumer applies for a loan (early disclosure). The lender may not collect any fees before the disclosure is provided, except for a reasonable fee for obtaining a credit report.

• The closing may not take place until expiration of a 7 day waiting period after the consumer receives the early disclosure.

• Consumers may shorten or waive the 3-day and/or 7-day waiting periods for a “bona fide personal financial emergency,” but only after receiving an accurate TILA disclosure.  In the final rule’s preamble, the Fed stated that it “believes waivers should not be used routinely to expedite consummation for reasons of convenience.”  The Fed decided not to insulate lenders from liability even where a consumer modifies or waives the waiting periods.

• If the annual percentage rate (APR) changes by more than 0.125 percent, the lender must provide a corrected disclosure to the borrower and wait an additional 3 business days before closing the loan.  The APR includes not only the interest rate on the loan but certain other costs related to settlement, so it will be important for any fees that affect the APR to be as accurate as possible, as early as possible, to minimize the need for a corrected TILA disclosure.

• For additional information you can go to Federal Reserve Board Final Rule and Staff Commentary (Federal Register, May 19, 2009) http://edocket.access.gpo.gov/2009/pdf/E9-11567.pdf

Update on the First Time Homebuyer Tax Credit
From Steve Ryan, MAR General Counsel and Michael McDonough, MAR Associate Counsel 

Q. I heard other states have programs where the $8000.00 Federal First Time Homebuyer Tax Credit is available for buyers to use as a down payment or to cover closing costs. What progress has been made on the effort to monetize the tax credit here in Massachusetts.

A. As of the middle of July, Massachusetts now joins a small but growing number of states that have developed a unique way to allow buyers to access the credit at a time when it can be most helpful in the home buying process.  In fact, a study just released by the National Association of REALTORS® found that 82% of would-be home buyers believe that saving enough for a down payment is still their biggest obstacle to home ownership.

Mass Housing is now offering a loan program that allows first-time homebuyers to use the $8,000 federal tax credit as part of their down payment or to cover closing costs, rather than waiting until they file their 2009 taxes.

How it works:

Homebuyers who are using a Mass Housing first mortgage loan to purchase their first home apply for the Tax Credit Loan program through their lender. The Tax Credit Loan is used to cover closing costs or as part of the down payment. In 2010, the homebuyer claims the $8,000 tax credit on their 2009 federal tax return. The homebuyer then repays the Mass Housing tax credit loan. No interest is charged if the Tax Credit Loan is repaid by June 1, 2010. Otherwise, the Tax Credit Loan is amortized over the next 10 years, at the same interest rate as the first mortgage

Eligibility:

To qualify for the Homebuyer Tax Credit Loan Program, you must be a first-time homebuyer using a Mass Housing mortgage; meet income limits and purchase price guidelines; purchase a one- to four-family home by November 30, 2009 and use the property as your primary residence for the life of the mortgage

For more information on the First Time Home Buyer Tax Credit including a detailed Q&A, visit www.marealtor.com

For more information on the Mass Housing Program visit their website at www.masshousing.com

As you may know, the Home Valuation Code of Conduct (HVCC) put into effect on May 1, 2009, created havoc as banks are no longer allowed to select, retain, recommend, or influence the selection of an appraiser; and banks and Realtors are prohibited from engaging in any substantive conversation with an appraiser or appraisal management company regarding the appraisal assignment. 

NAR President Charles McMillian said "Our members were experiencing delayed and lost sales because of poor appraisals conducted often by inexperienced appraisers who were not familiar with the area."

 This past week, the Federal Housing Finance Agency has clarified confusion over the new Home Valuation Code of Conduct and stated that communication with appraisers about errors, missing information, and unprofessional conduct are all permissible under the new HVCC.  Secondary mortgage market companies Fannie Mae and Freddie Mac updated HVCC FAQs to clarify similar points. These clarifications are helpful, but more is needed to ensure sales aren't unnecessarily harmed by HVCC, NAR President Charles McMillan says.   

"...I shared an NAR survey that found 76 percent of our members, representing both buyers and sellers, had experienced an increase in appraisal time since the new HVCC rules were enacted. Similarly, 71 percent of Realtors® noted an increase in the use of appraisers who were not from the local area. These factors often adversely affected the sale or the sales process, which occasionally resulted in the loss of a sale or a homeowner's inability to refinance into today's lower rates. I expressed our serious concern in the meetings." NAR continues to call for an 18-month moratorium on HVCC, which took effect May 1 with the intention of curbing inaccurate appraisals.    

• NAR's HVCC FAQs (PDF: 269K)
• NAR's HVCC Myths and Facts Flyer  (PDF: 345K)
• President's Podcast: Legislative Update on HVCC
• Freddie Mac Home Valuation Code of Conduct Q&A
• FHFA New Guidance Notice on HVCC (PDF: 83K)
• Fannie Mae HVCC FAQ (PDF: 55K)
• NAR Research: The Impact of HVCC (PDF: 294K)
  Complete Home Valuation Code of Conduct (PDF: 28K)

MLS President Barb Hassan Reponds.  At the annual meeting, Barb Davis Hassan asked about MLS System training and we wanted to give you an update.  First, we would like to redirect you to a fantasic resource in free online tutorials available right in Flex under the menu item "User Guides".  There you will find several fast and friendly tutorials on the functions of the FlexMLS system. 

You can also make an appointment with Sue O'Brien for one-on-one training by the hour at $20 (call office for appointment).  This would give you the ability to train on items that are specific to your needs, and not just general training.  You spoke, we listened! 

A change has been made to the pool options for Residential, Multi-Family and Mobile Homes.  You can now select between either Pool - Above Ground or Pool - In Ground.

All listings that had a pool have defaulted to Pool - Above Ground. 

Therefore, it is extremely important that you edit your listing if the pool is in-ground!
Thank you for your attention to this matter.

The Board held a Short Sale / Foreclosure Breakfast Forum on August 8th and distributed quite of bit a helpful information for REALTORS dealing with short sales and foreclosures. We have included all of the materials provided here as well.

Short Sale / Foreclosure Documents: The Short Sale Workflow Report by NAR, the LMC Sample Authorization for Realtors to interact with Bank, Sample Exclusive Right to Sell and Purchase and Sale language, and more. (870k pdf)

Also worth noting are the changes made to our MLS Rules and Regulation regarding the disclsoure of short sales. See below for the additions made to help clarify the process of disclosing the short sale possibility in the MLS listing information.

Section 5. Nothing in these MLS rules precludes a listing participant and a cooperating participant, as a matter of mutual agreement, from modifying the cooperative compensation to be paid in the event of a successful transaction.

NEW: Section 5.0.1: Participants may, but are not required to, disclose potential short sales to other participants and subscribers. When disclosed, participants may, at their discretion, advise other participants whether and how any reduction in the gross commission established in the listing contract, required by the lender as a condition of approving the sale, will be apportioned between listing and cooperating participants.

NEW 6. Multiple Listing Services must give participants the ability to disclose to other participants any potential for a short sale. As used in these rules, short sales are defined as a transaction where title transfers; where the sale price is insufficient to pay the total of all liens and costs of sale; and where the seller does not bring sufficient liquid assets to the closing to cure all deficiencies. Multiple Listing Services may, as a matter of local discretion, require participants to disclose potential short sales when participants know a transaction is a potential short sale. In any instance where a participant discloses a potential short sale, they must also be permitted to communicate to other participants how any reduction in the gross commission established in the listing contract required by the lender as a condition of approving the sale will be apportioned between listing and cooperating participants. All confidential disclosures and confidential information related to short sales must be communicated through dedicated fields or confidential “remarks” available only to participants and subscribers

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